More Canadians are Turning to Mortgage Brokers

When it comes to mortgage financing, more and more Canadians are choosing to work with a professional mortgage broker. According to a recent study by the Canada Mortgage and Housing Corporation (CMHC), 23 per cent of mortgages written were arranged through a broker.



Canadians are just catching up with their American neighbors, who are far less likely to simply walk into their home bank for a mortgage. In 2000, almost 70 per cent of all U.S. mortgages were arranged through mortgage brokers.

If we follow the U.S. model – and it seems that we are — then we’re in for a sea of change in the way Canadians manage their most significant personal asset. It makes sense. After all, investment returns aren’t as lucrative as they were five years ago, and investors are seeking out ways to make financial gains through avenues they may have overlooked.


There are some significant benefits to working with an independent mortgage broker. Firstly, let’s compare mortgage expertise: Most banks have one or more representatives who are specifically assigned to assist with mortgages. Their role is to develop mortgage business for the banks. A ontario mortgage broker, on the other hand, is a trained mortgage professional who has met standards for education. The comprehensive training of an independent mortgage broker may exceed the training of their counterparts at the bank. More importantly, the mortgage broker is independent. He or she is not an employee of a lending institution, but has access to rate and option information for a full spectrum of chartered banks and other lending institutions. Their role is to find the best possible mortgage rates and options for you.


Let’s also look at choice: A mortgage broker offers you access to many competitive lenders, each with a range of mortgage options. It would take weeks of research, telephoning and personal visits to recreate the range of features and options that a mortgage broker has at his or her fingertips. Rate information, mortgage options and payment schedules are up-to-the-moment, so you and your broker can make valid comparisons of the options available. The result of all this choice is a mortgage which is customized to meet your needs and to save you money.


Also consider accessibility. Your mortgage broker will be available to you before and after your mortgage closes, which will be good news for those who have spent long hours on hold or in a telephone voice answering loop.


Above all, clients have turned to mortgage brokers for better rates. Access to a broad range of lending institutions is a critical advantage for mortgage shoppers. A quarter-point difference on your mortgage rate can add up to thousands of dollars over the life of your mortgage. Many mortgage brokers work inside a brokerage organization with sufficient mortgage volumes that they can negotiate the best possible rates for your situation. Canadian homeowners who have experienced the benefits of a mortgage broker are unlikely to ever return to a world in which they simply accept the best posted rate at their local bank.

We are commited to providing quality information to help people make informed decisions about their mortgage financing needs.

See the latest Ontario Mortgage Rates.

[Source - Dominion Lending Centres] 

Don Cherry & Dominion Lending Centres - Check it Out!

Refinance my mortgage

Planning ahead really can save you money down the road. And with the high-cost holiday gift-buying and entertaining season quickly approaching, this may be the perfect time to refinance your mortgage and free up some money instead of relying on high-interest credit cards.

You may find that taking equity out of your home will help bring joy back into your holiday season – and start the New Year off on a debt-free note, as you may also be able to use some of the equity in your home to pay off high-interest debt such as your credit card balances. This will enable you to put more money in your bank account each month.

And since interest rates are hovering near historic lows – you can currently get a five-year mortgage for under 3.5% – switching to a lower rate may save you a lot of money, possibly thousands of dollars per year.

There are penalties for paying your mortgage loan out prior to renewal, but these could be offset by the lower rates and extra money you could acquire through a refinance. I can sit down with you and work through all of the equations to ensure this is the right move for you.

With access to more money, you will be better able to manage both your holiday spending and existing debt. Refinancing your mortgage and taking some existing equity out could also enable you to do many things you’ve been longing to accomplish – such as purchasing an investment property, taking that well-deserved vacation, renovating your home or even investing in your children’s education.

Paying your mortgage down faster
By refinancing, you may extend the time it will take to pay off your mortgage, but there are many ways to pay down your mortgage sooner to save you thousands of dollars in interest payments. Most mortgage products, for instance, include prepayment privileges that enable you to pay up to 20% of the principal (the true value of your mortgage minus the interest payments) per calendar year.

This will also help reduce your amortization period (the length of your mortgage), which, in turn, saves you money.

You can also increase the frequency of your mortgage payments by opting for accelerated bi-weekly payments. Not to be confused with semi-monthly mortgage payments (24 payments per year), accelerated bi-weekly mortgage payments (26 payments per year) will not only pay your mortgage off quicker, but it’s guaranteed to save you a significant amount of money over the term of your mortgage.

If, for instance, you have a $100,000 mortgage, an interest rate of 5% and an amortization period of 25 years, your monthly mortgage payment would be $581.60 and your total payments for a year would be $6,979.20 ($581.60 x 12).

To understand the savings accelerated bi-weekly mortgage payments can make, take the monthly mortgage payment of $581.60 and divide it by two ($581.60 ÷ 2 = $290.80).  Next, take that payment and multiply it by 26 to arrive at your total payments for the year ($290.80 x 26 = $7,560.80).

As you can see, by using the monthly mortgage payment plan, you’ve made payments totalling $6,979.20 for the year, while using the accelerated bi-weekly mortgage plan you’ve made payments totalling $7,560.80 – a difference of $581.60.

By opting for accelerated bi-weekly mortgage payments, you’re making one additional monthly payment per year.

Using this example, you would reduce the amortization on your $100,000 mortgage from 25 years to just over 21 years and your total savings on interest over the life of the mortgage would be just over $12,000.

By refinancing now – before the holiday season is in full swing – and planning ahead, you can put yourself and your family in a better financial position.

As always, if you have any questions about refinancing, reducing debt or paying down your mortgage quicker, I’m here to help!

15 Key Points Every Customer Should Know on Why They Should Use a Mortgage Broker

1) Mortgage Brokers in Ontario shop the best rates and products from 90 different Banks, Credit Unions and Trust Companies including: CIBC (First line), Toronto Dominion, Scotia, Bank of Montreal, Royal (Merix), and most of the Canadian Credit Unions, ING, etc.

2) Our services are free as the bank pays us a finder’s fee. The Industry is changing and banks now have to compete for business, so they value our referrals. Keep in mind, they spend millions of dollars operating their many branches, plus internal staffing and layers of management, so they can afford to offer deep discounts for the business we bring to them.

3) Isn’t it time the Banks compete for your mortgage business? You wouldn’t get just one opinion from one doctor if your physical condition were in question…why get just one opinion when your financial condition is going through the most significant transaction of its life?

4) Your bank very rarely gives you the best rates and products. Most homeowners renew their mortgage every four or five years automatically, so they rarely receive the best rates and programs. Since our Brokerage sends lenders millions of dollars of new business each month, they always offer us the deepest discounts which the mortgage agent will pass on to you - whether you are purchasing, refinancing or renewing.

5) Our application process is simple and quick. We just take a little info and send it electronically to the lenders that we feel are the best fit for your situation; A mortgage broker should have some feedback later that day or the next!

6) One of our best benefits is that we are available on your terms! Isn’t it frustrating when a bank takes several days to get back to you, and then you have to make your way through their endless voice mail boxes?

7) We take one credit bureau only and forward it to all the lenders! Many people inadvertently disqualify themselves from getting the best rate when they are shopping for a mortgage. When multiple banks pull a credit bureau, your Beacon score drops every time, sometimes eliminating the chance for the best mortgage or a mortgage at all!

8) There’s a mortgage product available for almost everyone now. When a person’s situation isn’t ideal, there’s usually a story about why; maybe they changed jobs, maybe they went through a divorce or another life-altering event and their credit was affected. It is our job to tell your story to the lender that will qualify you.

9) I appreciate your business. I sincerely appreciate your business and want to do a good job for you because I want all your family and friends business in the future! (Has any bank employee ever told you that?)

10) We are a certified Experts. Most bank employees are not certified and only know about their own bank’s products and do not know and cannot advise you to go to another lender where you can get qualified. You wouldn’t go to your G.P. if you needed a specialist. Deal with a mortgage expert specializing in mortgages from all lenders.

11) We work for you, not the banks. We don’t get paid unless we fund your mortgage with a lender that is giving you the product you need and we have no interest in getting the lender more interest on your mortgage, as the higher the interest, the lower the amount we can qualify you for; clearly we work in your best interests, not the lender’s.

12) Rate Protection. If the rates drop before you close you automatically get the lower rate and if rates go up you have the lower rate locked in. The last time you got pre-approved for a mortgage at a bank, did you get a commitment letter? Did they offer you a rate protection like the one we can secure for you?

13) Commitment Letter Every-time. We provide a commitment letter every time so you can relax and be confident your mortgage financing is in place!

14) 85% of all people in the USA use a mortgage broker and we are catching up quickly here in Canada.

15) A mortgage broker is no longer the “lender of last resort”! Actually we are becoming the first choice of the educated borrower.

Selecting the right mortgage term

Selecting the mortgage term that is right for you can be a challenging proposition for even the savviest of homebuyers, as terms typically range from six months up to 10 years.

By understanding mortgage terms and what they mean in dollars and sense, you can save the most money and choose the term that is best suited to your specific needs.

The first consideration when comparing various mortgage terms is to understand that a longer term generally means a higher corresponding interest rate. And, a shorter term generally means a lower corresponding interest rate. While this generalization may lead you to believe that a shorter term is always the preferred option, this is not always the case. Sometimes there are other factors – either in the financial markets or in your own life – that you will also have to take into consideration when selecting the length of your mortgage term.

If paying your mortgage each month places you close to the financial edge of your comfort zone, you may want to opt for a longer mortgage term, such as five or 10 years, so that you can ensure that you will be able to afford your mortgage payments should interest rates increase.

By the end of a five- or 10-year mortgage term, most buyers are in a better financial situation, have a lower outstanding principal balance and, should interest rates have risen throughout the course of their term, will be able to afford higher mortgage payments.

If you are shopping for a mortgage for an investment property, you will likely want to consider choosing a longer mortgage term – depending, of course, on your overall plan. This will allow you to know that the mortgage payments on the property will be steady for a long time and enable you to more accurately project your future income from the property.

As well, if you know you will not be staying in the same home for the next five or 10 years, opting for a shorter term can save you significant fees when it comes to early payout penalties.

Choosing the right mortgage term is a unique decision for each individual. By understanding your personal financial situation and your tolerance for risk, I can assist you in choosing the mortgage term that will work best for your situation.

As always, if you have any questions about mortgage terms or your mortgage in general, I’m here to help!

Home prices in Canada are overvalued by 14%

Home prices in Canada are overvalued by 14%, while affordability is eroding dramatically in some parts of the country, say two new reports on the state of the housing market. 

“When it comes to prices, by almost any measure, Canadian home prices are overshooting their fair value,” CIBC Senior Economist Benjamin Tal said in a report Tuesday. “The pace of appreciation has been quicker than justified by housing market fundamentals.”

The bank says the average price of a home has risen by almost 23% since the cyclical low of January 2009, and about 7% above recession levels.

As a result, at least 1.5 million homes across Canada are overvalued, particularly in Western Canada, and a price drop of 5% to 10% over the next 12 months would not be unlikely, said Tal. 

Click here to read the full article in The Star.

RBC, Canadian Banks raise rates on fixed mortgages

Royal Bank, TD Canada Trust and Laurentian Bank announced Monday they are raising rates they charge on certain fixed mortgages, including the benchmark five-year mortgage, which will jump 60 basis points to 5.85 per cent effective Tuesday.

"This is actually a fairly large increase reflecting what's happening in the bond market lately," said Benjamin Tal, senior economist with CIBC World Markets.

Most other lenders will likely follow. These are the largest posted rate increases since 1996.

"The rates are tied to our funding costs, which change day to day," said an RBC spokesperson. "Our long-term funding cost has gone up significantly since December." (Globe story)

If your are thinking of buying or refinancing in the near future, contact your mortgage agent soon to obtain a pre-approval or to get a rate hold!

Self Employed Mortgage Solutions

If you’re self-employed, you may have a more difficult time obtaining financing for your real estate purchases than you encountered prior to the credit crisis thanks to tighter lending criteria in lieu of the recent recession. But if you can prove your income, show you’re up-to-date on your taxes and that you have solid credit, your chances are greatly improved.

There are essentially two types of self-employed or business-for-self (BFS) borrowers – those who can prove their income and those who cannot, and must instead use a stated-income mortgage product.

By providing the required documentation, you’re much more likely to be approved for a mortgage if you qualify based on your income. The trouble is that if you cannot prove your income, you pose a higher risk in the eyes of lenders. In mortgages, as in most other things, pricing is based on risk – the riskier the lender perceives you as a borrower, the higher the interest rate you will be required to pay on your mortgage.

Canada Mortgage and Housing Corporation (CMHC) offers default mortgage insurance for BFS clients through a stated-income mortgage product up to 95% loan to value (LTV) – meaning the down payment can be as low as 5% of the purchase price – but the income has to make sense based on your occupation. This is important, because the chances of finding lenders to fund this type of deal are significantly boosted if the mortgage is insured.

Lenders and insurers are well aware of the tax write-offs that BFS borrowers can leverage, but these deals are accepted or declined based on average incomes for specific fields, as well as your credit rating. It pretty much goes without saying that those with credit blemishes will have a tough time obtaining traditional mortgage financing if they’re self-employed.

Getting pre-approved
While BFS mortgage financing is viewed on a case-by-case basis, if you work with me to obtain a pre-approval, you can be confident you have access to mortgage financing and you will know how much you can spend before you head out shopping for a property.

It’s important to note, however, that there is a significant difference between being pre-approved and pre-qualified. In order to obtain a pre-approval, the lender fully underwrites the deal, whereas with a pre-qualification only the most basic details are considered.

Should a pre-approval and/or mortgage default insurance be unobtainable, the maximum mortgage amount you are likely to qualify for is between 50% and 75% – meaning you will need a much larger down payment.

Alternative financing
If you do not qualify for traditional financing all is not lost, since you may be eligible for alternative – or private – funding.

As a mortgage professional, I also have access to private investors who are willing to lend money to BFS individuals looking to obtain mortgages. Although you will pay a higher interest rate, this route may enable you to acquire funds to purchase a home.

Private financing is equity based, meaning that the lender’s decision will be based on a specific piece of real estate as opposed to just focusing on your credit score. Private lenders want to know that the property is marketable and that they will be able to easily sell it should the mortgage go into foreclosure.

When you get into the private-lending realm, not only are the rates higher, but the mortgage terms are also shorter – typically for 12 months at a time. If you do end up in a private mortgage, your goal should be to build up your credit so you can head back to a traditional lender within 12 months – where you will receive better interest rates and, overall, more mortgage options.

I can build a step-by-step plan and guide you through the process of building your credit to get back into traditional financing as soon as possible.

New Canadian Mortgage Rules to Come into Force April 19th, 2010

Federal Finance Minister Jim Flaherty announced changes to mortgage insurance rules which are set to come into force on April 19th, 2010.

This means the government will adjust the rules for government-backed insured mortgages as follows:

1) Require that all borrowers meet the standards for a five-year fixed-rate mortgage even if they choose a mortgage with a lower interest rate and shorter term. This initiative will help Canadians prepare for higher interest rates in the future.

2) Lower the maximum amount Canadians can withdraw in refinancing their mortgages to 90% from 95% of the value of their homes. This will help ensure home ownership is a more effective way to save.

3) Require a minimum down payment of 20% for government-backed mortgage insurance on non-owner-occupied properties.

There were no changes to down payment requirements or length of amortizations for owner-occupied residences.

Click here for additional details on the changes.

DLC supports the Government's measures as a prudent and balanced approach.

We've seen a rise in consumer debt and we anticipate interest rates will go up in the future, so it makes sense to put policies in place early to protect consumers.

These changes will help moderate the market without being too severe. They help protect first-time home buyers.